Business card advantages (and a straw man plan)

I recently explained how signing up for certain business credit cards instead of personal cards could be a path to flying under Chase’s 5/24 rule*. For those who regularly seek credit card signup bonuses, this approach can potentially have many benefits far beyond 5/24. The idea is to focus most credit card signups on business cards that do not appear on your personal credit report, and signup for personal cards only occasionally.

* Chase’s 5/24 Rule: if you apply for a Chase credit card, they may deny your application due to having opened 5 or more credit card accounts in the past 24 months

The more I thought about this approach, the more appealing it became. Not only would this approach make it possible to stay within Chase’s 5/24 limits, but it may help in other ways as well. I’ll explain…

Business card disadvantages

Before talking about the benefits of signing up for business cards instead of personal cards, let me point out a couple of negatives (or, at least, factors that are not positive):

Credit Inquiries: This approach does not decrease credit inquiries on your credit report. Each inquiry for new credit, including small business card credit, can have a small negative impact on both your credit score and your ability to get approved for new cards.

Credit Card Utilization: As counterintuitive as it may sound, new credit accounts that appear on your credit report can help your credit score by lowering your credit utilization (assuming your spend patterns before and after getting the new account stay roughly the same). Business cards that don’t show up on your credit report do not have this advantage.

Business card advantages

Credit Card Utilization: This factor is listed in both disadvantages and advantages. While these business cards don’t help your credit utilization ratio by increasing the ratio’s denominator, they can help by reducing the numerator: the amount of credit used. If you’re a heavy spender and you put most spend on business credit cards which don’t show on your credit report, your overall credit utilization will remain low.

Age of Credit History: One of the downsides of signing up for new credit cards is that each new card usually lowers your average age of credit. This is true even if you soon cancel those new accounts (since even closed accounts stay on your report for 10 years). Business cards that don’t appear on your credit report will not have this negative impact. As long as you have some personal cards sitting around from long ago, your average age of credit will increase over time as long as you do not sign up for new cards that appear on your report.

Total Accounts: The number of accounts on your credit report hasn’t traditionally been a negative factor when signing up for new credit cards (card issuers previously seemed more worried about the number of recent inquiries for new credit), but Chase changed that with the introduction of their 5/24 rules. Plus, some other businesses may have already been sensitive to your number of accounts. For example, I’ve heard a few stories from readers where they were unable to get approved for the lowest automobile insurance rates due to the large number of accounts on their reports. So, again, since certain business cards do not appear on your credit report, focusing on these cards for new applications should help.

Current Options

OK, so the big question is whether there are enough good offers out there to make this business card approach feasible? Let’s take a look at what is available at the time of writing (limited to the card issuers that do not report business cards to personal credit bureaus)…

Chase

Note that while Chase business cards have most of the advantages of other business cards, they may not help with Chase’s own 5/24 rule since Chase can see these accounts even if they’re not on your credit report.

A sample 2 year plan

One approach to consider is to sign up for two business cards from a single card issuer once every two months (one exception: with Citibank you can only sign up for one card in a day). The advantage of signing up for multiple cards from the same issuer on a single day is that the hard inquiries would likely be combined and would result in only one hard inquiry every two months, for a total of 6 per year. That’s not too bad! And, if you’re lucky (or plan well), the inquiries may be spread across different credit bureaus such that the number of inquiries per credit bureau would be much less.

Credit card offers come and go regularly, so this is not a realistic plan, but I thought it would be a good exercise to see what’s possible…

All of the following cards are assumed to be business cards except where specified.

I added just a single personal card to the above list: either of the two personal Southwest cards (Premier or Plus). The reason is that if you’re going to sign up for a Southwest 50K offer anyway, you might as well get two cards in order to qualify for the Southwest Companion Pass (which requires earning 110,000 points in one calendar year). The reason for signing up for these cards in December is that it is then possible to complete all spend in January in order to secure the Companion Pass as early in 2018 as possible so that you’ll get almost two full years of free companion flights: all of the rest of that calendar year, and all of the next.

In total, not counting points earned from credit card spend, the above bonuses add up to the following:

215,000 transferable points (I lumped in 20K FlexPerks points for lack of a better place. I also put the SPG points here)

325,000 airline miles

185,000 hotel points

$800 cash

That’s not a bad two year haul for a casual signer-upper, but it’s also not exactly amazing. That said, the above results ignore a few significant things that could increase the totals significantly:

Increased bonuses: banks often offer short term increased bonuses. Instead of following a plan like the one shown above, one could do much better by focusing on the business cards that offer enhanced offers at any given time.

Better targeted offers: Especially with Amex, it is very common to get much better offers than those shown above.

More than two at a time: With some banks it may be possible to get more than two cards at a time, but still combine all inquiries into one.

Repeat signups: In some cases it is possible to sign up for the same card multiple times. Sometimes, but not always, it would be necessary to sign up with different businesses.

My approach

I’m not yet ready to declare myself “all in” to this approach. There are too many personal card offers that I wouldn’t want to miss. However, I do think that I’ll try to do more of these business card offers (especially when the bonus is high) and fewer personal card offers.

Sidebar: Are you eligible for business cards?

You must have a business to apply for business cards. That said, its not uncommon for people to have businesses without realizing it. If you regularly sell items on eBay, for example, then you have a business. Similar examples include: consulting, writing (e.g. blog authorship!), handyman services, owning rental property, etc. In any of these cases, your business is considered a Sole Proprietorship unless you form a corporation of some sort. If you want to keep things simple, you can use your own name as the business name and your own social security number as the business Tax ID.

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

That’s an interesting strategy but there’s a big problem. Most of the cards you mention suck and are not worth signing up for in the first place….the bonuses are puny and there’s no ongoing reason to use them for MS or regular spend vs. the more prominent cards.

Half of the AMEX cards you list are worthwhile, but those are one and done though, so not really part of a long term strategy, and you can’t plan around them because the key is to strike when the bonus is at it’s biggest.

The problem is that the very cards that you would actually want to churn….are the ones that are being limited: Chase, CITI AA, AMEX. That leaves BofA Alaska and it’s certainly not very useful to only sign up for one per year just to avoid inquiries, that’ll get you nowhere as 30k miles is not very useful, but 120k gets you something.

For someone who’s just starting out I would say this is not a bad strategy except I’d skip all the minor cards and hold out for the highest AMEX and Chase bonuses before signing up, regardless if it’s next up on your schedule.

I mostly agree with you, but I think that this looks worse than it is because the plan shows current bonuses as opposed to likely targeted offers or short term promo offers. Also, I think there are more chances for churning than is obvious but I’ll leave that discussion for private forums

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2 years ago

Guest

atxtravel

Perhaps….for bonuses that involve cash-like points, I wouldn’t settle for less than $400-500, and even then would think twice. Those would be my last-resort bonuses after I’ve exhausted all other cards.

The key is to amass large enough amounts in the 3-4 most valuable programs, UR, AA, AS…to some extent MR but they’re of more limited use. SPG points can be saved for the end, the 25-35k offer doesn’t amount to much in the grand scheme, except a top-off for some airline transfer.

Highly dependent of course on what normal spend someone has and their MS capacity.

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2 years ago

Guest

frank

Can you combine for example the gold and platinum amex delta business applications into one? Meaning apply for both at the same time to only have one credit hit?

Good point, I made a mistake with the straw man plan. Generally, no: Amex usually won’t approve two credit cards in one day (but multiple charge cards is OK). I’ve changed the plan to move the Delta Gold card to a different month.

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2 years ago

Guest

Vin

I see you moved it to: Amex Delta Platinum + Amex Blue for Business
Aren’t both of these credit cards?

Heh, yes you’re right. On the plus side, I’ve since heard of people being approved for multiple credit cards on the same day, so its probably OK as is

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1 year ago

Guest

David

Thank you for the post. With which banks can I get the credit card and bonus for each sole proprietorship that I have. In other words if i have 2 different sole proprietorship but use my name and ssn for both businesses, can I get 2 of the same business cards??

I really appreciate this post but frankly I feel the opportunity cost is too high. Here’s likely what one is missing out by this subservience to Chase (note I’ve used my own values – Alaskan at 1.5 cents/mile, AA same, UA at 1.6 cents/mile, HHonors at 0.4 cents/point, Marriott at 0.6 cents/point, Southwest at 1.5 cents/mile, TY at 1.6 cents/point (AA flight value):

1. 240K Alaskan miles (1x every 90 days personal card) + $200 in statement credits (net after $1,000 in spend per card) = ~$3,800 in value

No thanks Chase. I’ll stick to just churning things like Chase Hyatt until that ends too.

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2 years ago

Guest

Lantean

where do you see UA biz 50k offer?
i only see 30k at this time… and honestly won’t bite until it’s 70k.
thanks.

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2 years ago

Guest

T.

You can get Alaska personal card every 90 days; what about Alaska business – how often can you apply for the new one?

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2 years ago

Guest

Bryan

Datapoint: Applied for a targeted Chase Ink 60k offer for a new business (nonprofit) on May 23rd. Went to pending, received denial letter yesterday via mail. Just got off the phone with recon and the agent specifically cited the 5/24 rule to me. Asked about shifting credit from another Chase Biz card account and was told “No.” Seems that even targeted offers aren’t safe from 5/24.

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2 years ago

Guest

mbh

Yes, I think 5/24 is now carved in stone. I’ve been a very good Chase banking customer for years. Currently, I have over 1.5M in various accounts (long story), so it seemed like a good time to ask my private client banker if she could help me get the freedom unlimited card. I was very clear that I was most in violation of the 5/24 rule (which she did not appear to be familiar with). She tried to apply for me, messed up, called, and then told me to apply online and let her know if I had any problems. I should have known better, but I went ahead and tried. I then sent her the “under consideration” email and asked her to please see what she could do. Long story shortened a bit–not only was this a collosul fail, but because of her failed attempt in her office I ended up with TWO hard pulls and no card. I was livid. It was pretty clear that the “private client banker” gimic is worthless. She knew much less about chase’s cc rules than I do, and even after my email explainig to her what a mess she’d made, I don’t think she has a clue.

I agree with those who say that the opportunity costs are too high to try to play the 5/24 game. So, I’ll close some chase cards and keep some, but my application days are done (until they wake up and realize this is no way to run a railroad).

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2 years ago

Guest

BDP

My husband received a good offer for the AMEX Simply Cash Plus card. Any recent data points on whether I could sign up with the code and change it to my business? I scoured Google and couldn’t find much.

You have the Citi AA Platinum Select World MasterCard listed above. I know you state that all the ones listed are assumed to be business unless otherwise specified, but I can’t find any mention of it being a ‘business card’ when viewing the application…

[…] If you stop applying for new cards for a while, your “new” accounts will eventually become old (as in, older than 24 months). While you’re waiting, you can still rack up lots of points by signing up for a bunch of business cards that don’t show up on your personal credit report. Please see: Business card advantages (and a straw man plan). […]

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2 years ago

Guest

Tabitha

I like this plan and think I will do it for myself and keep churning cards for my hubby, best of both worlds that way right?
I do have one issue with your write up though. The chase business cards do count towards the 5/24 (as you mentioned) so this plan has more than 6 new cards that would show up for chase, and therefore negate the whole purpose of staying below 5/24

Good point. It does look like i made a mistake at the end of the plan. I’m still trying to get confirmation that Chase really counts their own business cards. I’ve now received many reader stories that suggest that maybe they do not.

[…] Fortunately, not all cards count towards the 5/24 Rule. Many business cards do not appear on personal credit reports and therefore do not count towards 5/24. See: Business card advantages (and a straw man plan). […]

[…] the posts “Flying under 5/24” and “Business card advantages (and a straw man plan)” I suggested an approach for staying under 5/24: Sign up primarily for business cards that […]

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2 years ago

Guest

Lisa Bowman

Hello, I have also applied for a Chase Ink and been denied due to too many personal cards opened in 2 years (5/24 rule). So Chase can clearly see my personal cards that have been opened when I try to get a biz card. My question is, would other biz card opens count towards 5/24? For example, if I got a Citi biz card or Amex biz card, do you guys think it would show up on Chase’s 5/24 rule? Trying to get under 5/24 for personal cards, but I don’t want to prolong this by getting business cards and have them still counted by Chase.

Since Citi and Amex biz cards do not show up on your credit report, they would NOT count towards 5/24. The only business rewards cards that I’m aware of that do appear on your credit bureau and would therefore count against 5/24 are:

Barclaycard
Capital One
Discover

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2 years ago

Guest

Lisa Bowman

Thanks Greg! So my follow up would be, could Citi and Amex look at my personal cards and choose to reject me based on too many personal accounts open (I have 8 in last 24 months)? As for my business credit file, I’ve been open 6 years and currently have 1 business card – all is in good standing.

Yes, they could, but Cit and Amex are easier on approvals than Chase. My guess is that you won’t have trouble.

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2 years ago

Guest

Misty

HI Greg,

Great article. thanks.
Want to add something about credit cards and US Bank as an FYI.
I have a received credit cards from US Bank in the past by freezing the 2 credit bureau reports mentioned.

However on this churn for the Olympics Flex Perks bonus card, I was turned down due to those 2 credit bureau accounts being frozen.
In speaking to the Rep… she said they now want to see those reports to get a better ‘all around picture of credit’.
I would have to re submit ( offer is over now) and probably get dinged again for the 2nd inquiry.
Not worth it.

[…] Fortunately, not all cards count towards the 5/24 Rule. Many business cards do not appear on personal credit reports and therefore do not count towards 5/24. See: Business card advantages (and a straw man plan). […]

[…] will have absolutely no negative impact on my credit score as long as the inquires combined (see: Business card advantages). Ideally I would find a business charge card since I was already pressing up against Amex’s 4 […]

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11 months ago

Guest

Yuri

What would be downgrade product change for CitiBusiness AAdvantage Platinum Select? Don’t see any “No annual fee” business cards in their line.

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